Friends, for the last few days, the media has been primarily focusing on the India-USA TARIFF WAR. At the centre of the issue is US President Donald Trump, who yesterday signed an executive order imposing an additional 25% tariff on Indian goods, citing the Indian government’s continued purchase of Russian oil revenue source the White House says is sustaining Russia’s war in Ukraine. 25% tariff has already been announced a few days back.
India’s counterargument on this is that Americans themselves are importing uranium and palladium and many other items from Russia, and it is a clear case of double standards by the USA. The USA has still not announced any tariffs for China which is importing more oil from Russia than India. In India, all the big industrial leaders are behind Indian government, and saying that we should not bow to this American blackmail. The Ministry of External Affairs issued a statement saying that “ India will take all necessary actions to protect its national interests.
Now let us go back to Background of this conflict:
Early Tensions
- For decades, India benefitted from the generalized System of Preferences (GSP), a US program that allowed duty-free access to over 3000 Indian goods.
- However, the US increasingly viewed India’s market as protectionist, with high import duties on automobiles, electronics, and agricultural goods.
- India on the other hand, criticized US subsidies and non-tariff barriers, especially to India steel, textiles and pharmaceuticals.
Trigger: US Tariffs Under Trump Administration (2018)
- In March 2018, President Trump imposed global tariffs of 25% on steel and 10% on aluminum, under Section 232 of the Trade Extension Act, citing national security.
- India, a key exporter of steel and aluminum to the US was affected.
India’s Response
- Initially, India sought exemption through negotiations.
- However, after months of failed talks, India announced retaliatory tariffs in 2019, on 28 US products including Almonds (India is the largest importer), Apples, Walnuts, Chickpeas, motorcycles and Industrial products.
In June 2019, the major blow came when the US revoked India’s GSP status, affecting nearly $5.6 billion worth of Indian exports. This decision was based on US assumptions that India:
- Did not provide equitable and reasonable access to its markets.
- Imposed price controls on medical devices, especially coronary stents and knee implants.
- Had restrictive data localization rules and high tariffs.
No major break through came till Donald Trump was President (2020).
Change in US Administration: Biden Era from 2021 to 2024
- President Joe Biden adopted a less confrontational approach, preferring dialogue over tariffs.
- The US Trade Representative (USTR) and India’s Ministry of Commerce resumed high-level trade discussions.
- However, tariffs remained largely in place, with only gradual relief.
2023-24: Developments and Partial Resolution
Key Developments
- In 2023, the US and India agreed to settle six WTO disputes, including those related to tariffs and ICT products.
- India agreed to reduce tariffs on key US exports, including Walnuts, Cranberries, Almonds (partial reduction).
- The US, in turn removed retaliatory duties on on certain India steel products.
Current Trade Snapshot (2024-2025)
- Bilateral trade value (goods and services) has crossed $200 billion.
- The US is India’s largest trading partner, surpassing China.
- India is a major exporter of IT services,, pharmaceuticals, gems & jewelry, and textiles to the US.
- The US exports energy, defence equipment, aerospace, and agricultural products to India.
Now coming back to the present tariff issue:
When President Trump came back as the US President in January 2025, he thought he has become the king of this world and can do whatever he wants to do. He talked of ending Russia-Ukraine war, Israel –Palestine conflict and many other issues. But his continued effort was bearing no fruits as no one was ready to listen to him, and his statements were daily changed to suit his mood of that day.
But the present situation in the world is not the same as it was a decade back, when first time he became President of the USA. His European allies are not doing well economically. In the world market the BRICS countries are doing much better than G7 countries. India and China are in the world’s top five economies and they are not ready to be dominated by western bloc.
There is a news in media that India has already decided to levy tax on profits of various American companies like Meta, Google, Amazon who earns billion of dollars from India and take back profit to the USA. It is being said that if that happens India will be able to set back the losses due to increase in tariffs. It is just that India is waiting how this tariff will end?
Let us wait and watch, I think within one month situation might be clear.
Waiting for your feedback on this blog.
Anil Malik
Mumbai, India
7th August 2025